People have been trained their whole lives to keep score...
We do this in education, our work performance reports, in sports, etc. Why not do it with our finances?
Now, there is no grade scale we can universally go by and there shouldn’t be. Every person's situation is different so go ahead and be your own judge. Besides, is there anyone harder on you than yourself?
#1 Keep Financial Score
Are you going forwards or backwards?
For a young person or family starting out, it is very common that your assets are equal to your liabilities. You either haven't bought a house yet or just did and you haven't built any equity.
Re-do your net worth statement in six months and see if your net worth is improving or getting worse.
If it is going backwards, then you need to figure out why.
#2 Write Your Will
A net worth statement is a fantastic guide to writing your will. When you complete your net worth statement, you have a clear picture for yourself, your lawyer, your accountant, and your financial advisor.
You will then be able to decide the most fair and effective way to transfer these assets to your beneficiaries.
Don’t forget to have a family meeting when you’re done writing your will.
#3 Plan Your Retirement
Finally, your net worth statement will tell you how you’re going to turn your assets into an income for the rest of your life. Ask yourself some questions:
- Which of these assets will cover my fixed expenses?
- Which of these assets will cover my spending money (ie. vacations, entertainment, vehicles)?
- Will these assets be enough for my spouse and I to retire?
- How can I use all of these assets together and still be tax efficient?
If there was one financial tool you should use, a net worth statement would be a great start. Use it to keep score, write your will, and plan your retirement.
If you need help with your statement, find a financial advisor.
Click the "Download Now" button to access our Net Worth Statement PDF. You don't have to enter any information.
And if you're really proud of your number, share it in the comment section below!